Forecast Cost of Goods Sold Statement. Mendez, Inc. with $8,000,000 of par stock outstanding, plans to budget net earnings of 6%, before income taxes, on this stock.
The Marketing Department budgets sales at $12,000,000.
The budget director approves the sales budget and expenses as follows: Marketing 15% of sales
Administrative.. .. .. .. .. .. .. .. .. .. .. . .. .. .. .. 5% of sales
Financial. '” 1 % of sales
Labor is expected to be 50% of total manufacturing costs; raw materials for the budgeted production will cost $2,500,000; therefore, any savings on manufacturing costs will have to be in factory overhead.
Inventories are to be as follows:
Beginning of Year End of Year
Finished goods ” . Work in process . Raw materials .
Required: The projected cost of goods sold statement, showing therein the budgeted purchases of materials and the adjustments for inventories of raw materials, work in process, and finished goods.